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LOS ANGELES: DECIDES NOT TO PRIVATIZE COUNTY HOSPITAL

The Los Angeles County Board of Supervisors will not approve the privatization of Rancho Los Amigos Medical Center, Los Angeles Times reports. County supervisors said that their decision not to privatize the hospital was based on an independent report conducted by Peat Marwick LLP. The county had originally projected that privatization would yield $40 million in savings over seven years. However, the report, which was released September 10, said that the projections were no longer valid due to funding decisions by the state and federal governments and specifics of the "proposed contract" with Catholic Healthcare West Southern California. Specifically, the report showed that savings from privatization would be only about $9 million. The plan to privatize the hospital had been part of an effort to cut $120 million from the county health system this year; Rancho has already "sustained tens of millions in cuts since the summer of 1995." RESPONSES Los Angeles Health Services Director Mark Finucane agreed with the board's decision to hold off on privatizing Rancho. He said, "We have explored all of those options people have asked us to explore ... and the short answer is keeping Rancho as part of the county system is a wise policy and a wise business decision." Finucane noted that the state and federal governments have allocated $26 million to Rancho, providing that the hospital remains a public facility. However, he said the hospital will still have to come up with "several millions of dollars worth" of cuts this year. Finucane also said that although the federal government had pushed for privatization, officials from the Health Care Financing Administration "are OK" with the new decision. He said, "They don't want us to privatize for privatization's sake. What they want us to do is explore alternative ways of delivering service." Finucane added that the hospital will have to consider ways to "act more like a private hospital in order to survive, most notably by dramatically increasing its census count and filling about 40 chronically empty beds in the 210-bed facility." OTHER HOSPITALS Finucane denied that the board of supervisors' decision signals a "fundamental change in the direction of the health care system." However, the Los Angeles Times notes that while the county had been considering privatizing High Desert Hospital in Lancaster, officials backed off those plans when "no firm expressed interest in operating the hospital without a guaranteed profit that would have required a significant subsidy from the county" (Meyer, 9/17). Los Angeles County has been working for two years to overhaul its financially strapped health care system. Click here for two past stories on the overhaul.

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